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  1. 1. A Dissertation Report Titled “A Study on Measuring Customer Satisfaction at ‘Reliance Fresh’ Retail Outlets in Bangalore” Submitted in Partial Fulfillment of the Requirements of Bangalore University for the Award of the Degree of Master of Business Administration Submitted By Ranjan Kumar Reg. No: 09SKCMA059 Under the Guidance of Prof. K. Ranganathan EMPOWERING MINDS Acharya Institute of Management & Sciences 1st Cross, 1st Stage, Peenya Industrial Area Bangalore – 560058 2009 – 2011 1
  2. 2. DeclarationI, Ranjan Kumar hereby declare that this dissertation titled, “A study on measuringcustomer satisfaction at ‘Reliance Fresh’ retail outlets in Bangalore.” is record oforiginal and independent study carried out by me under the guidance of Prof. K.Ranganathan, Acharya Institute of Management and Sciences, Bangalore, submitted inthe partial fulfillment of the requirement of the Bangalore University, for the award ofdegree of Masters of Business Administration.I further declare that this report prepared is the original study conducted by me and has notbeen submitted earlier for the award of any other Degree / Diploma by Bangalore Universityor any other University.Place: Bangalore Ranjan KumarDate: 2
  3. 3. EMPOWERING MINDS Acharya Institute of Management & Sciences Peenya, Bangalore – 560058 Certificate from the GuideCertified that this dissertation titled, “A study on measuring customer satisfaction at‘Reliance Fresh’ retail outlets in Bangalore” is record of original and independent studycarried out by Ranjan Kumar of 4th Semester MBA under my guidance.This report prepared by him is original and has not formed a basis for the award of any otherDegree / Diploma by Bangalore University or any other University.Place: Bangalore Prof. K. RanganathanDate: 3
  4. 4. EMPOWERING MINDS Acharya Institute of Management & Sciences Peenya, Bangalore – 560058 CertificateCertified that this dissertation titled, “A study on measuring customer satisfaction at‘Reliance Fresh’ retail outlets in Bangalore” is record of original and independent studycarried out by Ranjan Kumar of 4th Semester MBA under the guidance of Prof. K.Ranganathan.This report prepared by him is original and has not formed a basis for the award of any otherDegree / Diploma by Bangalore University or any other University.Prof. K. Ranganathan Dr. Kerron G ReddyDepartment of MBA Principal and CEOPlace: Bangalore Place: BangaloreDate: Date: Certificate of Approval 4
  5. 5. This dissertation report of Ranjan Kumar titled “A study on measuring customersatisfaction at ‘Reliance Fresh’ retail outlets in Bangalore” is approved in quality andform an has been found to be fit for the Partial Fulfillment of the Requirements of BangaloreUniversity for the Award of Degree of Master of Business Administration.Internal Guide External ExaminersName: Prof. K. Ranganathan 01) Name:Signature: Signature:Date: Date: 02) Name: Signature: Date: Acknowledgement 5
  6. 6. The toughest of endeavors in the world is not possible without the support of a helping handwhich guides and motivates a person to take on any challenge head on. Inputs from suchhelping hands are always like very essential because more often or not certain mistakeswhich go unnoticed from our eyes.I am thankful to Dr. Kerron Reddy, Principal and CEO of Acharya Institute ofManagement and Sciences, who had provided all the required facilities to carry out thedissertation project work and nurturing my skills to execute the requirements.I am heartily thankful to my guide Prof. K. Ranganathan, Acharya Institute ofManagement and Sciences, whose encouragement, guidance and support from the initial tothe final level enabled me to develop an understanding of the subject. I offer my regards andblessings to all my Professors of AIMS and all the people who supported me in any respectduring the completion of the dissertation project.Last but not the least I thank my dear parents, teachers and friends who have been source ofsupport, strength, inspiration and encouragement for whatever I am today.Ranjan KumarDate: 6
  7. 7. Chapter 01 IntroductionTopic: “A study on measuring customer satisfaction at ‘Reliance Fresh’ retail outlet in Bangalore” 7
  8. 8. 1.1 INTRODUCTIONCustomer satisfaction is a measure of how product and services supplied a company can meetthe customer expectations. Customer satisfaction is still one of the single strongest predictorsof customer retention. It’s considerably more expensive to attract new customers than it is tokeep old once happy. In a climate of decreasing brand loyalties, understanding customerservice and measuring customer satisfaction are very crucial. There is obviously a strong linkbetween customer satisfaction and customer retention. Customer perception of service andquality of product will determine the success of the product or service in the market.With better understanding of customer perceptions, companies can determine the customersneed e actions required to meet the can customer’s needs. They can identify their ownstrengths and weaknesses, where they stand in comparison to their competitors, chart out pathfuture progress and improvement. Customer satisfaction measurement helps to promote anincreased focus on customer outcomes and stimulate improvements in the work practices andprocesses used within the company.In a sharp contrast to the retail sector in developed economies, retailing in India – thoughlarge in terms of size - is highly fragmented and unorganized. With close to 12 million retailoutlets the country has one of the highest retail densities worldwide. Retailing like rest of theworld retailing is one of the largest industries in India with sales amounting to about $350billion, but organized retail is estimated at only US$ 8 billion. It is country’s largest source ofemployment after agriculture, has deepest penetration into rural India and accounts to about10-11 % of’ India’s GDP and around 8%of the employment.Inefficiency in the existing supply chains presents further opportunity for organized playersto draw on this large market even as lack of consumer culture and low purchasing powerrestricted the development of modern formats. Migration from unorganized to organizedretail has been visible with economic development in most countries The Indian retail industry is the fifth largest in the world. Comprising of organized andunorganized sectors, India retail industry is one of the fastest growing industries in India,especially over the last few years. Though initially, the retail industry in India was mostlyunorganized, however with the change of tastes and preferences of the consumers, the 8
  9. 9. industry is getting more popular these days and getting organized as well. With growingmarket demand, the industry is expected to grow at a pace of 25-30% annually. The Indiaretail industry is expected to grow from Rs. 35,000 crore in 2004-05 to Rs. 109,000 crore bythe year 2010.1.2 Retail Meaning and Definition1 To distribute in small portions or at second hand; to tell again or to many (what has been told or done); to report; as, to retail slander. The sale of commodities in small quantities or parcels; -- opposed to wholesale; Sometimes, the sale of commodities at second hand. Done at retail; engaged in retailing commodities; as a retail trade; a retail grocer. the consumer; as, to retail cloth or groceries.1.3 Importance of Retail MarketingThe retail landscape is in a constant state of change. As retail marketing is one of the mostdynamic and exciting areas of growth in the global economy so, to beat the competition,stand out in a saturated marketplace and succeed despite tightening margins, savvy retailersare focusing on customer-centric service, personalization and loyalty programs to attract andretain customers.A successful retail organization understands their market, their customers, and theimportance of strategic location. Because competition in the retail industry can be fierce,such organizations need the best micro marketing tools available to analyze where to placenew stores, establish customer profiles, and determine best marketing practices in order tofind new customers. The trick in retailing, therefore, is to find things that you can do forcustomers that will modify their behavior in profitable ways. 9
  10. 10. As retailers strive to touch consumers at every step of the purchase cycle, retail marketing hasevolved to become a mosaic of mass media branding, tactics for driving store traffic, in-storeexperience, and loyalty programs.1.4 Definition of researchResearch is a more systematic activity directed towards discovery and development of anorganized body of knowledge. • It is directed towards aiming at a solution to a problem. • It emphasizes development of general principles of theories helpful in predicting in future occurrence. • Based on observed experience or empirical evidence. • It involves gathering new data from primary or firsthand sources and using the existing data for the new purpose.1.5 Principles of samplingThe idea behind principle of sampling is that we seek knowledge about the total units byobserving a few units and extend our inference about the sample to the entire population.1.6 QuestionnaireThis method of data collection is quite popular in case of big enquiries. A questionnaireconsists of a number of questions printed or typed in a defined order on a set of forms. Thequestionnaire is mailed to respondents who are expected to read and understand the questionsand write down the reply on the space meant for the purpose in the questionnaire itself.1.7 Need for the studyOver the years, research has been done in different service sectors, even in retail services, tofind out the drivers of customer satisfaction with respect to service quality and servicefeatures of Reliance Fresh products. To survive in competitive market and make thenecessary improvements in the service quality and feature trend and comparison on is a needfor study. 10
  11. 11. Chapter 02Research Methodology 11
  12. 12. 2.1 IntroductionIndia’s service sector has matured considerably during the last few years and has beenglobally recognized for its high growth and development. The Indian retail market, which isthe fifth largest retail destination globally, has been ranked as the most attractive emergingmarket for investment in the retail sector by AT Kearneys eighth annual Global RetailDevelopment Index (GRDI), in 2009. As per a study conducted by the Indian Council forResearch on International Economic Relations (ICRIER), the retail sector is expected tocontribute to 22 per cent of Indias GDP by 2010.In today’s complex business environment, it has become very crucial for companies to attainhigh customer satisfaction for long term sustainable growth and like companies of the otherbusiness domains. Retail also considers their customers as the most important asset, is notjust a theory but also an economic fact. Therefore in the current scenario, the research oncustomer satisfaction on business domain of retail sector is quite important and critical forunderstanding of customer satisfaction and retention, it is very crucial for any company tolearn what actually differentiates the satisfied customers from the unsatisfied ones.In a sharp contrast to the retail sector in developed economies, retailing in India - thoughlarge in terms of size - is highly fragmented and unorganized. With close to 12 million retailoutlets the country has one of the highest retail densities worldwide. Retailing like rest of theworld retailing is one of the largest industries in India with sales amounting to about $350billion, but organized retail is estimated at only US$ 8 billion.It is country’s largest source of employment after agriculture, has deepest penetration intorural India and accounts to about 10-11 % of’ India’s GDP and around 8%of theemployment. Inefficiency in the existing supply chains presents further opportunity fororganized players to draw on this large market even as lack of consumer culture and lowpurchasing power restricted the development of modern formats. Migration fromunorganized to organized retail has been visible with economic development in mostcountries. 12
  13. 13. Thus the study is conducted to understand the satisfaction level of consumer that may beinfluenced by the Price, Quality, and Service Convenience of the products. The projectreveals satisfaction level of the customers on ‘Reliance Fresh’ products, comparison betweenKirana shop and the retail outlets, Future trend of retail sector in India. Customers aremoving towards the new trend of retail shopping in shopping malls. Most of the competitorsare existing in the market in that ‘Reliance Fresh’ is trying occupying market share it shows agood market potential.2.2 Statement of the problemIndian organized retailing is under transition today, bringing a lot of changes in format ofretailing. In this regard measuring customer satisfaction in organized ‘Reliance Fresh’ outletsin Bangalore, preferences and experiences will be of use to shape the retail out lets and theirofferings. The changing attitude of consumers led them to step forward from unorganizedKirana stores to the organized retailing formats.2.3 Literature reviewIndia has been rather slow in joining the organized retail revolution that was rapidlytransforming the economics in the other Asian tigers. The food retailing outlets in India aregrowing at a very fast rate in the every city. The food retailing outlets in the recent years haveshown tremendous impact in buying decision of the consumers. Retailing is one of the largestin the global economy, is going through a transition phase in India. The need of catering theshopping experience has been fulfilled by the shopping malls. They let customers experiencetheir freedom of choice. They not only offer variety but also executive transparent pricing.Technical, in its “retail outlook October 2007” reports that the total retail market will growfrom $336 billion in 2006 to $590 billion dollar in 2011, which translated to an annualgrowth rate to 12%. Even while the share of modern retailing to four-fold from 4% in 2006 to16% in 2011 and further to 2016, traditional retail will still grow in absolute terms from $324billion dollar in 2006 to $493 billion dollar in 2011. 13
  14. 14. A study by McKinsey point out that the Indian market for consumer goods is expected toreach $400 billion by 2010.Indian market is one of the five largest markets in the world.Liberalization of economy in the 1990’s and the entry of large players in the retail businesshave bought the retail industry in spot light.Indias retail industry is the second largest sector, after agriculture, which providesAccording to Associated Chambers of Commerce and Industry of India (ASSOCHAM), theretail sector will create 50,000 jobs in next few years.2.4 Objectives of the study • To study the latest trends of retailing in India • To study customer satisfaction in organized retail outlets towards branded retailing • To compare branded retailing shops and Kirana stores on the basis of consumer perception and satisfaction • Level of satisfaction of ‘Reliance Fresh’ outlet users • Reasons for dissatisfaction2.5 Research MethodologyResearch is the systematic process of collecting and analyzing information (data) in order toincrease our understanding of the phenomenon about which we are concerned or interested.Research is a common parlance refers to a search for knowledge. The urge of understandthings may be rightly termed as research, in other words we can also refer research as ascientific and systematic search of pertinent information of specific topic. The concept ofresearch is thus closely linked with human endeavor for better understanding of his evolution,environment and growth through diverse stages of human history.Research therefore, has been an integral part of academic pursuits in the past. It has servedtwo fold purpose, intellectual sharpening and evolving new theories to explain diversephenomenon through which mankind survived with the progress of modern era. Human 14
  15. 15. curiosity has leads to understand his environment in different angles. This process ofstudying this awareness of man manifested in a process known as research2.6 Research DesignDescriptive ResearchDescriptive Research is a fact finding investigation which is aimed at describing thecharacteristics of individual, situation or a group (or) describing the state of affairs as it existsat present. The type of research method used is descriptive. The aim of descriptive research isto verify formulated hypotheses that refer to the present situation in order to elucidate it.Descriptive research is used because the research is primarily concerned with describing thenature and conditions and degree in detail of the present situationA descriptive research is conducted using 100 respondents, where in the detailed analysis ofpreference of shopping, preference on organized and unorganized outlets, latest trend towardsbranded retail outlets especially on ‘Reliance Fresh’ .Satisfaction level of customers towardsmore retail outlets. Where in the detailed analysis of the quality of the service is analyzedwith respect to various variables and compared with the competitors to arrive at a conclusionon the basis of finding and suggestions, which would help the company to provide greaterservice and make necessary improvements in the service quality.2.7 Tools of Data CollectionIn present study both primary as well as secondary data will be used, which will helps inidentifying the customer satisfaction towards ‘Reliance Fresh’ retail outlets and towards the‘KIRANA’ shops and the latest trends of retailing in India.Data SourcesIn present study both primary as well as secondary data is used, which helps in identifyingthe customer satisfaction towards ‘Reliance Fresh’ retail outlets and towards the ‘KIRANA’shops and the latest trends of retailing in India.Primary Data 15
  16. 16. The primary data for the study will be collected by means of structured questionnaire andwill be distributed personally to the 100 respondents to get their responses.Secondary dataThe secondary data will be collected from company websites, lounge books, referrals,internet browsing, Journals.Design of QuestionnaireThe questionnaire will be designed to collect the data to keep in view the objective of thestudy. It will be mostly closed ended and open ended short questions for the convenience ofrespondents.2.8 Sampling PlanSampling is that part of statistical practice concerned with the selection of a subset ofindividual observations within a population of individuals intended to yield some knowledgeabout the population of concern, especially for the purposes of making predictions basedon statistical inference.Sampling Method: Convenience SamplingConvenience sampling procedure was adopted for selecting respondents; the respondents willbe mainly from Bangalore city, where the company has its retail outlets. Samples will becollected by survey method and the response of 100 respondents will be considered foranalysis of data & interpretation.Sampling Unit: The sampling unit will be customers who will shop in the retail store or thesimilar store.Sample Size: Sample size will be taken as 100 respondents with respondents from inside andoutside the similar retail outlet.2.9 Planning and AnalysisThe primary data will be collected by means of structured questionnaire from 100respondents and the secondary data will be collected from websites, company reports,magazines, referrals and lounge books. The data collected from the study will be analyzedand will be represented by simple graph, tables, and charts and will be interpreted forproviding relevant recommendation. 16
  17. 17. Field workThe data is collected from the people doing shopping in Bangalore city (Aiyappa temple nearJalahalli cross, Kodigehalli, Ramaiah Layout, Malleshwaram) where the company hasoutlets.Data presentation and analysisThe primary data was collected by means of structured questionnaire from 100 respondentsthe secondary data was collected from websites, company reports, magazines, referrals andlounge books. The data collected from the study is analyzed by simple graph, tables, andcharts and interpreted for providing relevant recommendation.2.10 Limitation of the Study • This study is restricted to Bangalore city only and therefore, the results obtained out of this study cannot be generalized to other parts and rural area of the country. • Due to time constraints the sample size is restricted to 100 customers. • The analysis will be based on the current data; as such it may lose its relevance in the future. • The response of the respondents may be biased.2.11 Scope of the Project • The project aims to reveal the market status & competition for ‘Reliance Fresh’ • It helps the company in strategy formulation and planning for further improvements. • The study aims to reveal the customer satisfaction towards organized retail outlets. • To know where ‘Reliance Fresh’ is facing problems and where it is having new opportunities in retail sector. • To compare with organized retail outlets and unorganized retailers and to study the latest trends of retailing in India.2.12 Chapter SchemeChapter 1: Introduction 17
  18. 18. It provides an insight and Introduction about the broad area of the topic chosen and also thetheoretical background of the study.Chapter 2: Research MethodologyIt consists of detailed coverage of the manner in which the report is prepared. Researchmethodology helps to understand the practical steps adopted to reach the data and methods ofanalysis and interpreting the response. It also includes Need for study, Statement of Problem,Objective, Research Design, Source of Data, Tools of Analysis, Scope and Limitation ofStudy, Literature review.Chapter 3: Industry ProfileThe chapter is concerned with the introduction and the background of Retail Industry withreference to Reliance Fresh as a whole which gives detailed information about the origin,growth, development and its future.Chapter 4: Data Analysis and InterpretationThe data collected from the study will be presented and analyzed using appropriate statisticaltools for interpretation and providing relevant suggestions.Chapter 5: Summary of FindingsThe summary of findings is based on analysis and interpretation of primary and secondarydata collected for this study with respect to the objectives.Chapter 6: Suggestions & ConclusionThe suggestions are based on findings of the study and conclusion is made. s 18
  19. 19. Chapter 03 Industry and Company Profile3.1 INDUSTRY PROFILE 19
  20. 20. A retailer or retail store is any business enterprise whose sales volume comes primarily fromretailing. Retail organizations exhibit great variety and new forms keep emerging. There arestore retailers, non store retailers, and retail organizations. Consumers today can shop forgoods and services in a wide variety of stores. The best-known type of retailer is thedepartment store. Japanese department stores such as Takashimaya and Mitsukoshi attractmillions of shoppers each year. These stores feature art galleries, cooking classes, andchildren’s playgrounds. A retailer is at the end of the distributive channel.He provides goods and service to the ultimate consumers. This he does through his smallorganization, with the help of a few personnel. In an individual retail store there is not muchscope for organization except in the sense that the shopkeeper has to organize apportions histime and resources. The need for organization becomes essential as soon as he hires people oenters into partnership or takes the help of members of his family in running his store. Aretailer deals in an assortment of goods to cater to the needs of consumers. His objective is tomake maximum profit out of his enterprise.With that end in view he has to pursue a policy to achieve his objective. This policy is calledretailing mix. A retailing mix is the package of goods and services that store offers to thecustomers for sale. It is the combination of all efforts planned by the retailer and embodiesthe adjustment of the retail store to the market environment. Retailing mix a communicationmix and a distribution mix. The maximum satisfaction to the customers is achieved by aproper blend of all three.The success of the retail stores, therefore, depends on customers’ reaction to the retailing mixwhich influences the profits of the store, its volume of turnover, its share of the market, itsimage and status and finally its survival.3.1.1 RetailingRetailing is the set of business activities that adds value to the products and services sold tothe consumer for their personal or family use. A "retailer" buys goods or products in largequantities from manufacturers or importers, either directly or through a wholesaler, and thensells smaller quantities to the end-user. Retail establishments are often called shops or stores.Retailers are at the end of the supply chain. Manufacturing marketers see the process ofretailing as a necessary part of their overall distribution strategy. The term "retailer" is also 20
  21. 21. applied where a service provider services the needs of a large number of individuals, such asa public utility, like electric power.  Retailing is an important institution in our society,  Retailing provides considerable value to consumers while giving people opportunities for  Rewarding and challenging careers.  Retail formats and companies are now major factors in the industry.  The key to successful retailing is offering the right product, at the right price, in the right  Place, at the right time, and making a profit.  Retailers must understand what customers want and what competitors are offering now and in the future.3.1.2. The World of Organized Retailing  Retailers are using sophisticated communications and information systems to manage their business. The use of new technologies helps retailers reduce their operations costs, while better serving their customers.  To compete against non-store retailers, stores are now becoming more than just places to buy products. They are offering entertaining and educational experiences for their customers.  In this dynamic environment, entrepreneurs are launching new companies and concepts and becoming industry leaders, while traditional firms have had to rethink their business.  Retail managers today must make complex decisions on selecting target markets and Retail locations, determining what merchandise and services to offer, negotiating with Supplier and distributing merchandise to stores, training and motivating sales associates, and deciding how to price, promote and present merchandise.3.1.3. Retail mix. 21
  22. 22. The retail mix is the combination of factors retail used to satisfied customer needs andinfluences their purchase decision. Its include the type of merchandise and services offered,merchandise pricing, advertising, promotional programs store design merchandise display,assistance to customer provided by salespeople, and convenience of the store’s location.  Retail mix is the term used to describe the various elements and methods required to formulate and execute retail marketing strategy.  Retail managers must determine the optimum mix of retailing activities and coordinate the elements of the mix.  While many elements may make up a firm’s retail mix, the essential elements may include:  Store location,  Merchandise assortments  Store ambience,  customer service,  price,  Communication with customer  Personal selling  Store image  Store design  Sales incentives  People  Process  Physical evidence3.1.4. Composition of retail mix  Place  Product  Price  Promotion  People 22
  23. 23.  Process  Physical EnvironmentKey element1) Place (store location)2) Product (merchandise)  Target market Product development  Channel structure Product management  Channel management Product features and benefits  Retailer image Branding  Retail logistics Packaging  Retail distribution3) Price4) Promotion  Costs developing promotional mixes  Profitability Advertising management  Value for money Sales promotion  Competitiveness Sales management  Incentives Public relations  Quality Direct marketing  Status  After-sales services5) People element6) Process element  Staff capability Order processing  Efficiency Database management  Availability Service delivery  Effectiveness queuing system  Customer interaction Standardization3.2. RETAIL INDUSTRY IN INDIA 23
  24. 24. Retail is Indias largest industry. It accounts for over 10 per cent of the Indias GDP andaround 8 per cent of the employment. Retail sector is one of Indias fastest growing sectorswith a 5 percent compounded annual growth rate. Indias huge middle class base and itsuntapped retail industries are key attractions for global retail giants planning to enter newermarkets. Driven by changing lifestyles, strong income growth and favorable demographicPatterns, Indian retail are expected to grow 25 per cent annually. It is expected that retail inIndia could be worth US$ 175-200 billion by 2016.The organized retail industry in India had not evolved till the early 1990s. Until then, theIndustry was dominated by the un-organized sector. It was a seller’s market, with a limitedNumber of brands and little choice available to customers. Lack of trained manpower, taxLaws and government regulations all discouraged the growth of organized retailing in IndiaDuring that period. Lack of consumer awareness and restrictions over entry of foreign playersinto the sector also contributed to the delay in the growth of organized retailing.Foundation for organized retail in India was laid by Kishore Biyani of Pantaloon RetailsIndia Limited (PRIL). Following Pantaloons successful venture a host of Indian businessgiants such as Reliance, Bharti, Birla and others are now entering into retail sector. A numberof factors are driving Indias retail market. These include: increase in the young workingpopulation, hefty pay packets, nuclear families in urban areas, increasing workingwomenpopulation, increase in disposable income and customer aspiration, increase in expenditurefor luxury items, and low share of organized retailing.Indias retail boom is manifested in sprawling shopping centers, multiplex- malls and hugecomplexes that offer shopping, entertainment and food all under one roof. But there is a flipside to the boom in the retail sector. It is feared that the entry of global Business giants intoorganized retail would make redundant the neighborhood Kirana stores resulting indislocation in traditional economic structure. Also, the growth path for organized retail inIndia is not hurdle free. The taxation system still favors small retail business. With theintrinsic complexities of retailing such as rapid price changes, constant threat of productobsolescence and low margins there is always a threat that the venture may turn out to be aloss making one.A perfect business model for retail is still in evolutionary stage. Procurement is very vital cogin the retail wheel. The retailer has to fight issues like fragmented sourcing, unpredictable 24
  25. 25. availability, unsorted food provisions and daily fluctuating prices as against consumerexpectations of round-the-year steady prices, sorted and cleaned food and fresh stock at allTimes.The Indian retail industry is the fifth largest in the world. Comprising of organized andunorganized sectors, India retail industry is one of the fastest growing industries in India,especially over the last few years. Though initially, the retail industry in India was mostlyunorganized, however with the change of tastes and preferences of the consumers, theindustry is getting more popular these days and getting organized as well. With growingmarket demand, the industry is expected to grow at a pace of 25-30% annually. The Indiaretail industry is expected to grow from Rs. 35,000 crore in 2004-05 to Rs. 109,000 crore Fig Present Indian Retail Industry Scenario 25
  26. 26. The retail industry is divided into organized and unorganized sectors. Over 12 million outletsoperate in the country and only 4% of them being larger than 500 sq ft (46 m²) in size.Organized retailing refers to trading activities undertaken by licensed retailers, that is, thosewho are registered for sales tax, income tax, etc. These include the corporate-backedhypermarkets and retail chains, and also the privately owned large retail businesses.Unorganized retailing, on the other hand, refers to the traditional formats of low-costretailing, for example, the local kirana shops, owner manned general stores, paan/beedishops, convenience stores, hand cart and pavement vendors, etc. • Unorganized market: Rs. 583,000 cores • Organized market: Rs.5, 000 cores • 5X growth in organized retailing between 2005-2012 • Over 4,000 new modern Outlets in the last 3 years • Over 5,000,000 sq. ft. of mall space under development • The top 3 modern retailers control over 750,000 sq. ft. of retail space • Over 400,000 shoppers walk through their doors every week • 47 global fortune companies & 25 of Asias top 200 companies are retailers • Biggest player in India is Pantaloon Retail India Limited. • Growth in organized retailing on par with expectations and projections of the last 5 Years on • Course to touch Rs. 35,000 corers (US$ 7 Billion) or more by 2005-06The growth factors of3.2.2. Scope of the Indian Retail MarketThe scope of the Indian retail market is immense for this sector is poised for the highestgrowth in the next 5 years. The India retail industry contributes 10% of the countries GDPand its current growth rate is 8.5%. In the Indian retail market the scope for growth can beseen from the fact that it is expected to rise to US$ 608.9 billion in 2009 from US$ 394billion in 2005. The organized retailing sector in India is only 3% and is expected to rise to25- 30% by the year 2010. There are under construction at present around 325 departmentalstores, 300 new malls, and 1500 supermarkets. This proves that there is a tremendous scope 26
  27. 27. for growth in the Indian retail market. The growth of scope in the Indian retail market ismainly due to the change in the consumer’s behavior. For the new generation have preferencetowards luxury commodities which have been due to the strong increase in income, changinglifestyle, and demographic patterns which are favorable. The scope of the Indian retailmarket has been seen by many retail giants and that’s the reason that many new players areentering the India retail industry.3.2.3. The Future Indian Retail ScenarioThe retail industry in India is currently growing at a great pace and is expected to go up toUS$ 833 billion by the year 2013. It is further expected to reach US$ 1.3 trillion by the year2018 at a CAGR of 10%. As the country has got a high growth rates, the consumer spendinghas also gone up and is also expected to go up further in the future. In the last four year, theconsumer spending in India climbed up to 75%. As a result, the India retail industry isexpected to grow further in the future days.By the year 2013, the organized The retail sector in India is witnessing a huge revampingexercise as traditional markets make way for new formats such as departmental stores,hypermarkets, supermarkets and specialty stores. Western-style malls have begun appearingin metros and second-rung cities alike introducing the Indian consumer to a shoppingexperience like never before.The sector is at an inflexion point where the growth of organized retailing and growth in theconsumption by the Indian population is going to take a higher growth trajectory. The Indianpopulation is witnessing a significant change in its demographics. Organized retail is on alltime high in India. The growth is boosted by various factors such as availability ofprofessional practices, media proliferation, various brands which are gaining value therebyenhancing industry growth, availability of various funding options, regulations like VATimplementation to make processes simple, sea change in demographics of country andinternational exposure.This report is structured into three major parts. First part comprises of Executive Summaryand highlights of the retail sector. Second part consists of 12 chapters which includes anintroduction and discusses vital topics in retail industry like A Brief Overview of GlobalRetail Industry, Indian Retail Industry, Organized Retail Formats in Indian retail, Food Retail 27
  28. 28. in India, Apparel Retail in India, Growth Drivers of Indian Retail, Technology implications,Issues & Challenges faced by the sector, Critical Success Factors, Regulations and Policiesand Future Outlook of the industry.The third and final part consists of supporting literature in the form of Annexure. This reportwill be useful to entrepreneurs interested in getting insights of retail industry for doing directand indirect business in the sector, management consultants, banks evaluating retail sectorgrowth trajectory. The Indian population is witnessing a significant change in itsdemographics. Organized retail is on all time high in India. The growth is boosted by variousfactors such as availability of professional proposals, investors who are interested in thissunrise sector, retail professionals for getting larger picture of the sector. Last but not theleast this report can also be useful for educational institutions imparting courses in retailsector is also expected to grow at a CAGR of 40%.The retail sector in India is witnessing a huge revamping exercise as traditional markets makeway for new formats such as departmental stores, hypermarkets, supermarkets and specialtystores. Western-style malls have begun appearing in metros and second-rung cities alikeintroducing the Indian consumer to a shopping experience like never before.The sector is at an inflexion point where the growth of organized retailing and growth in theconsumption by the Indian population is going to take a higher practices, media proliferation,various brands which are gaining value thereby enhancing industry growth, availability ofvarious funding options, regulations like VAT implementation to make processes simple, seachange in demographics of country and international exposure.This report is structured into three major parts. First part comprises of Executive Summaryand highlights of the retail sector. Second part consists of 12 chapters which includes anintroduction and discusses vital topics in retail industry like A Brief Overview of GlobalRetail Industry, Indian Retail Industry, Organized Retail Formats in Indian retail, Food Retailin India, Apparel Retail in India, Growth Drivers of Indian Retail, Technology implications,Issues & Challenges faced by the sector, Critical Success Factors, Regulations and Policiesand Future Outlook of the industry. The third and final part consists of supporting literaturein the form of Annexure. This report will be useful to entrepreneurs interested in gettinginsights of retail industry for doing direct and indirect business in the sector, managementconsultants, banks evaluating retail sector proposals, investors who are interested in this 28
  29. 29. sunrise sector, retail professionals for getting larger picture of the sector. Last but not theleast this report can also be useful for educational institutions imparting courses in retailmanagement.3.2.4. The opportunities in Indian organized retailThe opportunities in Indian organized retail sector are many for this sector is witnessing aboom. The retail industry in India amounted to US$ 200 billion in 2006, and out of thisamount the Indian organized retail sector amounted to US$ 6.4 billion. The opportunities inIndia organized retail sector can be judged from the fact that by 2010 it is expected to rise toUS$ 23 billion. The various opportunities in the organized retail sector in India are mainlythere for the Indian consumers behavior pattern has changed.Now the Indian consumer gets more hefty pay- packages, is younger, a large number ofwomen are working, western influences, and more disposable income have opened a lot ofopportunities in Indian organized retail sector. The Indian consumer wants to shop, eat andget entertainment in one place and is having also given Indian organized retail sector anopportunity to grow.The Indian government in 2005 allowed foreign direct investment (FDI) in single brand retailto 51%. This has opened up a lot of opportunities in India organized retail sector. In fact 325departmental stores, 300 new malls, and 1500 supermarkets are being built which shows thetremendous opportunities in the organized retail sector in India. Many Indian companiesseeing the various opportunities in organized retail sector in India have entered it. Pantaloons have decided to increase its retail space to 30 million square feet with aninvestment of US$ 1 billion. Reliance Industries Limited is targeting for annual sales of US$25 billion by 2011. It is planning to invest US$ 6 billion in order to open 1,500 supermarketsand 1000 hypermarkets. Bharti Telecoms is planning a joint venture with Telco a global retailgiant worth £ 750 million. The opportunities in the organized retail sector in India have alsoincreased with the desire of many global retail giants to set up shop here. The global retailgiants who are entering the Indian organized retail sector are: 29
  30. 30. • Tesco, Wal- Mart , Metro AG , Carrefour SAThe opportunities in Indian organized retail sector are varied and it must be fully exploited bythe Indian retailers.3.2.5. Growth of Indian RetailAccording to the 8th Annual Global Retail Development Index (GRDI) of AT Kearney, Indiaretail industry is the most promising emerging market for investment. In 2007, the retail tradein India had a share of 8-10% in the GDP (Gross Domestic Product) of the country.According to a report by Northbride Capita, the India retail industry is expected to grow toUS$ 700 billion by 2010. By the same time, the organized sector will be 20% of the totalmarket share. It can be mentioned here that, the share of organized sector in 2007 was 7.5%of the total retail market.Growth of Retail Companies in IndiaGrowth of Retail Companies in India exhibits the boom in the retail industry in India over theyears. The increase in the purchasing power of the Indian middle classes and the influx of theforeign investments has been encouraging in the Growth of Retail Companies in India.Growth of Retail Companies in India:OverviewGrowth of Retail Companies in India is still not yet in a matured stage with great potentialswithin this sector still to be explored. Apart from the retail company like Nilgiris ofBangalore, most of the retail companies are sections of other industries that have stepped inthe retail sector for a better business. The Growth of Retail Companies in India is mostpronounced in the metro cities of India, however the smaller towns are also not laggingbehind in this. The retail companies are not only targeting the four metros in India but also isconsidering the second graded upcoming cities like Ahmedabad, Baroda, Chandigarh,Coimbatore, Cochin, Ludhiana, Pune, Trivandrum, Simla, Gurgaon, and others. The SouthIndian zone have adopted the process of shopping in the supermarkets for their daily 30
  31. 31. requirements and this has also been influencing other cities as well where manyhypermarkets are coming up day to day.Reasons for the fast Growth of Retail Companies in India:The retail companies are found to be rising in India at a remarkable speed with the years andthis has brought a revolutionary change in the shopping attitude of the Indian customers. TheGrowth of Retail Companies in India is facilitated by certain factors like - existing Indianmiddle classes with an increased purchasing power rise of upcoming business sectors like theIT and engineering firms change in the taste and attitude of the Indians effect of globalizationheavy influx of FDI in the retail sectors in India.3.2.6. The Emerging Trends in the Indian Organized Retail SectorThe emerging trends in the Indian organized retail sector would help the economic growth inIndia. There is a fantastic rise in the Indian organized retail sector in a very short period oftime between 2001 and 2006. Eventually, out of the shadows of the unorganized retail sector,India has a chance of tremendous economic growth, both in India and abroad. The emergingtrends in the Indian organized retail sector are also adding up to the development of theIndian organized retail sector. The relaxation by the government on regulatory controls onforeign direct investments has added to the process of the growth of the Indian organizedretail sector.The infrastructure of the retail sector will evolve radically in the recent future. Theemergence of shopping malls is increasing at a steady pace in the metros and there are furtherplans of expansion which would lead to 150 new ones coming up in India by 2008. As thecount of super markets is going up much faster than rate of growth in retail sector, it is takingthe lions share in food trade. The growth of the Indian organized retail sector is anticipated tobe heavier than the growth of the gross domestic product. Alterations in peoples lifestyle,growth in income levels, and encouraging conventions of demography are proving favorablefor the new emerging trends in the Indian organized retail sector. The success of this retailsector would also lie in the degree of penetration into the lower income strata to tap thepossible customers in the lowest levels of society. 31
  32. 32. The demands of the buyers would also be enhanced by more access to credit facilities. Withthe arrival of the Transnational Companies (TNC), the Indian retail sector will undergo atransformation. At present the Foreign Direct Investments (FDI) is not encouraged in theIndian organized retail sector but once the TNCS get in they inevitably try to oust theirIndian counterparts. This would be challenging to the retail sector in India.3.2.7. Challenges facing the Indian Organized Retail sectorThe challenges facing the Indian organized retail sector are various and these are stopping theIndian retail industry from reaching its full potential. The behavior pattern of the Indianconsumer has undergone a major change. This has happened for the Indian consumer isearning more now, western influences, women working force is increasing, desire for luxuryitems and better quality. He now wants to eat, shop, and get entertained under the same roof.All these have lead the Indian organized retail sector to give more in order to satisfy theIndian customer.The biggest challenge facing the Indian organized retail sector is the lack of retail space.With real estate prices escalating due to increase in demand from the Indian organized retailsector, it is posing a challenge to its growth. With Indian retailers having to shell out more forretail space it is affecting their overall profitability in retail. Trained manpower shortage is achallenge facing the organized retail sector in India.The Indian retailers have difficulty in finding trained person and also have to pay more inorder to retain them. This again brings down the Indian Retailers profit levels. The Indiangovernment has allowed 51% foreign direct investment (FDI) in the India retail sector to onebrand shops only.This has made the entry of global retail giants to organized retail sector in India difficult.This is a challenge being faced by the Indian organized retail sector. But the global retailgiants like Tesco, Wal-Mart, and Metro AG are entering the organized retail sector in Indiaindirectly through franchisee agreement and cash and Carry wholesale trading. Many Indiancompanies are also entering the Indian organized retail sector like Reliance IndustriesLimited, Pantaloons, and Bharti Telecoms. But they are facing stiff competition from theseglobal retail giants. As a result discounting is Indian becoming an accepted practice. 32
  33. 33. 3.3 Indian unorganized retail sector & its challengeIndia is the only one country having the highest shop density in the world, with 11 outlets per1000 people (12 million retail shops for about 209 million households). Rather we can see thedemocratic scenario in Indian Retail (because of low level of centralization, low capital inputand due to a good number of self organized retail).India started its Retail Journey since ancient time. In Ancient India there was a concept ofweekly HAAT, where all the buyers & sellers gather in a big market for bartering. It takes apretty long times to & step to shape the modern retail. In between these two concepts (i.e.between ancient retail concept & the modern one there exist modern kirana/ mom and popshops or Baniya ki Dukan. Still it is predominating in India so the Indian retail industry isdivided into two sectors- organized and unorganized.Organized retail sector refers to the sectors undertaken by licensed retailers, that is, thosewho are registered for sales tax, income tax, etc. These include the corporate retail formats ofthe exclusive brand outlets, hypermarkets, supermarkets, departmental stores and shoppingmalls.Unorganized retailing, on the other hand, refers to the traditional formats of low-costretailing, for example, hand cart and pavement vendors, & mobile vendors, the local kiranashops, owner manned general stores, paan/beedi shops, convenience stores, hardware shop atthe corner of your street selling everything from bathroom fittings to paints and smallconstruction tools; or the slightly more organized medical store and a host of other smallretail businesses in apparel, electronics, food etc.3.3.1. Characteristics of unorganized retailSmall-store (kirana) retailing has been one of the easiest ways to generate self-employment,as it requires limited investment in land, capital and labor. It is generally family runbusiness, lack of standardization and the retailers who are running this store they are lackingof education, experience and exposure. This is one of the reasons why productivity of thissector is approximately 4% that of the U.S. retail industry. Unorganized retail sector is stillpredominating over organized sector in India, unorganized retail sector constituting 98%(twelve million) of total trade, while organized trade accounts only for 2%. 33
  34. 34. 3.3.2 The reasons for resistance to organized retail: • In smaller towns and urban areas, there are many families who are traditionally using these kirana shops/ mom and pop stores offering a wide range of merchandise mix. Generally these kirana shops are the family business of these small retailers which they are running for more than one generation. • These kirana shops are having their own efficient management system and with this they are efficiently fulfilling the needs of the customer. This is one of the good reasons why the customer doesn’t want to change their old loyal kirana shop. • A large number of working class in India is working as daily wage basis, at the end of the day when they get their wage, they come to this small retail shop to purchase wheat flour, rice etc for their supper. For them this the only place to have those food items because purchase quantity is so small that no big retail store would entertain this. • Similarly there is another consumer class who are the seasonal worker. During their unemployment period they use to purchase from this kirana store in credit and when they get their salary they clear their dues. Now this type of credit facility is not available in corporate retail store, so this kirana stores are the only place for them to fulfill their needs. • Another reason might be the proximity of the store. It is the convenience store for the customer. In every corner the street an unorganized retail shop can be found that is hardly a walking distance from the customer’s house. Many times customers prefer to shop from the nearby kirana shop rather than to drive a long distance organized retail stores.3.4 Retail formats in India 34
  35. 35. • Hypermarkets/supermarkets: large self-servicing outlets offering products from a variety of categories. • Mom-and-pop stores: they are family owned business catering to small sections; they are individually handled retail outlets and have a personal touch. • Departmental stores: are general retail merchandisers offering quality products and services. • Convenience stores: are located in residential areas with slightly higher prices goods due to the convenience offered. • Shopping malls: the biggest form of retail in India, malls offers customers a mix of all types of products and services including entertainment and food under a single roof. • E-trailers: are retailers providing online buying and selling of products and services. • Discount stores: these are factory outlets that give discount on the MRP. • Vending: it is a relatively new entry, in the retail sector. Here beverages, snacks and other small items can be bought via vending machine. • Category killers: small specialty stores that offer a variety of categories. They are known as category killers as they focus on specific categories, such as electronics and sporting goods. This is also known as Multi Brand Outlets or MBOs. • Specialty stores: are retail chains dealing in specific categories and provide deep assortment. Mumbais Crossword Book Store and RPGs Music World is a couple of examples. 3.4.1. Evolution and Trends in Organized Retailing Formats and Retail Outlets in IndiaHypermarket: It is the largest format in Indian retail so far is a one stop shop for the modernIndian shopper.Merchandise: food grocery to clothing to spots goods to books to stationery.Space occupied: 50000 Square feet. And above.SKUs: (Stock keeping Unit) 20000-30000.Example: Pantaloon retail’s Big Bazaar, RPG’s Spencer’s (Giant), Vishal mega mart. 35
  36. 36. Supermarket: A subdued version of a hypermarket.Merchandise: Almost similar to that of a hypermarket but in relatively smaller proposition.Space occupied: 5000 Sq. ft. or more.SKUs: (Stock keeping units) Around 10000.Example: Nilgiris, Apna Bazaar, Trinethra/more.Convenience store: A subdued version of a supermarket.Merchandise: Groceries are predominantly sold.Space occupied: Around 500 Sq. ft. to 3000 Sq. ft.Example: stores located at the corners of the streets, Reliance Retail’s fresh, More RetailDepartment store: A retail establishment which specializes in selling a wide range of A product without single prominent merchandise line and is usually a part of a retail chain.Merchandise: Apparel, household accessories, cosmetics, gifts etc.Space occupied: Around 10000 Sq. ft. – 30000 Sq. ft.Example: Landmark Group’s Lifestyle, Trent India Ltd.’s Westside.Discount store: Standard merchandise sold at lower prices with lower margins and highervolumes.Merchandise: A variety of perishable/ non perishable goods.Example: Viswapriya Group’s Subiksha, Piramal’s TruMart.Specialty store: It consists of a narrow product line with deep assortment.Merchandise: Depends on the storesExample: Bata store deals only with footwear, RPG’s Music World, Crossword.MBO’s: (Multi Brand outlets), also known as Category Killers. These usually do well inbusy market places and Metros.Merchandise: Offers several brads across a single product category. 36
  37. 37. Kirana stores: The smallest retail formats which are the highest in number (15 million approx.) in India.Merchandise: Mostly food and groceries.Space occupied: 50 sq ft and even smaller ones exist.Malls: The largest form of organized retailing today located mainly in metro cities, in Proximity to urban outskirts.Merchandise: They lend an ideal shopping experience with an amalgamation of product, Service and entertainment, all under a common roof.Space occupied: Ranges from 60,000 sq ft to 7, 00,000 sq ft.Example: Pantaloon Retail’s Central, Mumbai’s Iorbit.3.5 COMPANY PROFILE 37
  38. 38. "Growth has no limit at Reliance. I keep revising my vision. Only when you can dreamit, you can do it." Dhirubhai H. Ambani3.5.1 OverviewReliance Industries Limited (RIL) is Indias largest private sector company on all majorfinancial parameters with turnover of Rs1,18,354 crore (US$ 27.23 billion), cash profit ofRs17,678 crore (US$ 4.07 billion), net profit of Rs11,943 crore (US$ 2.75 billion) and networth of Rs63, 967 crore (US$ 14.72 billion) as of March 31, 2007.RILis the first and onlyprivate sector company from India to feature in the Fortune Global 500 list of WorldsLargest Corporations and ranks amongst the worlds Top 200 companies in terms of profits.RIL is amongst the 25 fastest climbers ranked by Fortune. RIL also features in the ForbesGlobal list of worlds 400 best big companies and in FT Global 500 list of worlds largestcompaniesReliance Industries Limited (RIL) is Indias largest private sector company on all majorfinancial parameters with turnover of Rs. 73,164 crore (US $ 16.7 billion), cash profit of Rs.12,087 crore (US $ 2.8 billion), net profit of Rs. 7,572 crore (US $ 1.7 billion), net worth ofRs. 40,403 crore (US $ 9.2 billion), and total assets of Rs. 80,586 crore (US $ 18.4 billion).RIL is the first and only private sector from India to feature in 2005 Fortune Global 500 listof Worlds Largest Corporations and ranks amongst the worlds Top 200 companies in termsof profits. Reliance in now putting up a completely export oriented unit with 30 MMPTAcapacity under Special Economic Zone (SEZ) at Jamnagar. Construction will commence veryshortly and the project is schedule to go into operation by March 2008.RIL group is about to establish yet another industrial landmark by putting up the worldslargest grass root refinery totally dedicated for exports with an outlay of over Rs. 27,000crores. RIL group, as a corporate citizen, has always believed in creating "employability"apart from providing employment. Towards this, it is process of establishing a World Class 38
  39. 39. Craft Training Institute This world class facility will have latest generation equipments andmachineries imported from best of class manufacturers and will be located at Jamnagar. TheScheme We will bring in thousands of youngsters - skilled / semi skilled / partially skilled /unskilled from all over the country and provided temporary barracks - labour accommodationwith full facilities through contractors. The institute will train them in respective trades withproper process for "Certification". Current estimate warrants training of (assuming 50% willbe Certified): Welders - 8000, Carpenters - 5000, Pipe Fitters - 5000, Grinders - 5500, MillWright Fitters - 2000 Immediately on certification, they will be absorbed by our contractorsand be deployed on our world scale project at Jamnagar for a period of approx. of 2 years.Thereafter, Reliance is confident that these skills, which are badly required, will have anunlimited market and therefore, offer a great earning future prospect to these youngstersaround the globe.Reliance Fresh falls under Reliance Industries. It is the first retail venture of the Group. Thecompany offers fresh fruits and vegetables, staples, groceries, fresh juice bars, FMCGproducts and dairy products and non-vegetarian items. Reliance Industries has investednearly Rs. 3,000 crores to expand the Reliance Fresh stores. Reliance Fresh directly buysstock from the farmers to cut down on the wastage. The stores work on The Ranger Formatwhich means selling of fresh vegetables to the road sellers. Reliance Retail has signed a pactwith Apple for the establishment of a chain of Apple Specialty Stores branded as iStore,starting with Bangalore.Reliance Fresh is the convenience store format which forms part of the retail businessof Reliance Industries of India which is headed by Mukesh Ambani. Reliance plans to investin excess of Rs 25000 crores in the next 4 years in their retail division. The company alreadyhas in excess of 560 reliance fresh outlets across the country. These stores sell fresh fruitsand vegetables, staples, groceries, fresh juice bars and dairy products.A typical Reliance Fresh store is approximately 3000-4000 square feet and caters to acatchment area of 2–3 km.3.5.2 The Reliance Empire 39
  40. 40. Reliance being the all encompassing company has entered into all the sectors, retail beingtheir latest.Reliance Industries LimitedChairman and Managing Director: Mukesh AmbaniMarket Capitalization: INR 39,609,150,020 (Sept, 2006)Total Shares Outstanding: 22,405,900 (Sept, 2006)Closely Held Shares: 11,365,943Sales: INR 10,512,963,000According to the company website "1 out of every 4 investors in India is a Relianceshareholder. RIL is ranked at 342 in the 2006 Fortune Global 500 list among the world’slargest corporations.3.5.3 Company HistoryPost launch, in a dramatic shift in its positioning and mainly due to the circumstancesprevailing in UP, West Bengal and Orissa, it was mentioned recently in news dailies that,Reliance Retail is moving out of stocking fruits and vegetables. Reliance Retail has decidedto minimize its exposure in the fruit and vegetable business and position Reliance Fresh as apure play super market focusing on categories like food, FMCG, home, consumer durables,IT and wellness, with food accounting for the bulk of the business.The company may not stock fruit and vegetables in some states. Though Reliance Fresh isnot exiting the fruit and vegetable business altogether, it has decided not to compete withlocal vendors partly due to political reasons, and partly due to its inability to create a robustsupply chain. This is quite different from what the firm had originally planned.When the first Reliance Fresh store opened in Hyderabad last October, not only did thecompany said the store’s main focus would be fresh produce like fruits and vegetables at amuch lower price, but also spoke at length about its “farm-to-fork’’ theory. The idea thecompany spoke about was to source from farmers and sell directly to the consumer removingmiddlemen out of the way. 40
  41. 41. Reliance Fresh, Reliance Mart, Reliance Digital, Reliance Trendz, Reliance Footprint,Reliance Wellness, Reliance Jewels, Reliance Timeout and Reliance Super are variousformats that Reliance has rolled out.In addition, Reliance Retail has entered into an alliance with Apple for setting up a chain ofApple Specialty Stores branded as I Store, starting with Bangalore.Reliance Fresh, the $20 billion Reliance Industries brand for its grocery outlets, Mondayopened nine new stores in the national capital region (NCR) with an investment of about Rs.8billion ($180 million).The stores have been opened in Ghaziabad, Faridabad, Noida, GreaterNoida and Gurgaon covering a total area of 19,000 sq ft. Mukesh Ambanis RelianceIndustries Ltd. entered the retail trade last year with an investment of $5.6 billion and hasplans to expand its footprint in the NCR in multiple formats of hypermarkets, supermarketsand convenience stores. We plan to have a pan-India presence and achieve a target of Rs.10billion revenue by 2010 by which time we hope to complete Phase I, Raghu Pillai, presidentand chief executive of Reliance Retail, said at a press conference here.In the first phase we have plans to employ 500,000 people. We are following an all-inclusivemodel giving the right affordability across all income groups, Pillai added. According to him,Reliance will open 100 stores in the NCR by the quarter ending in June 2007.We areaggressively partnering farmers by following a farm-to-fork strategy in our supply chainmanagement model and ensure that we deliver fresh fruits and vegetables at affordable pricesto our consumers. Currently, Reliance Fresh has 49 stores across the country covering anarea of 109,000 sq ft. Reliance Fresh also offers a membership and loyalty program –Reliance One - to deliver customized benefits to frequent shoppers. Currently, it has 200,000loyalty customers across Hyderabad, Jaipur and Chennai. With a vision to generate inclusivegrowth and prosperity for farmers, vendor partners, small shopkeepers and consumers,Reliance Retail Limited (RRL), a subsidiary of RIL, was set up to lead Reliance Group’sforay into organized retail.Since its inception in 2006, Reliance Retail Limited (RRL) has grown into an organizationthat caters to millions of customers, thousands of farmers and vendors. Based on its coregrowth strategy of backward integration, RRL has made rapid progress towards building anentire value chain starting from the farmers to the end consumers. 41
  42. 42. In the last year, Reliance Retail Limited (RRL) continued to fulfill its commitment ofenriching Indian consumer’s shopping experience and providing quality merchandise at anattractive value proposition. More than 3 years into operation, RRL has now expanded itspresence in more than 85 cities across 14 states in India. RRL forged ahead with itsexpansion plans and rolled out stores across the country. RRL’s footprint now spans anetwork of more than 1,000 stores.RRL operates several ‘value’ & ‘specialty’ formats. The ‘value’ formats that RRL operatesare: ‘Reliance Fresh’, a neighborhood concept, ‘Reliance Mart’, an all under one roofsupermarket concept & ‘Reliance Super’, a mini-mart concept. The ‘value’ formats offer awide range and assortment of products required for daily household needs. The ‘specialty’formats are: ‘Reliance Digital’, a consumer durables & information technology concept,‘Reliance Trends’, an apparel & accessories concept, ‘Reliance Wellness’, a health, wellness& beauty concept, ‘I Store by Reliance Digital’, an exclusive Apple products concept,‘Reliance Footprint’, a footwear concept, ‘Reliance Jewels’, a jewelers concept, ‘RelianceTime Out’, a books, music & entertainment concept, ‘Reliance AutoZone’, an automotiveproducts & services concept and ‘Reliance Living’, a home ware, furniture, modularkitchens, furnishings concept.RRL rapidly expanded the stores network it operates through strategic partnerships withworld-class companies such as Marks & Spencer and Pearl Europe. RRL also entered into anexclusive distribution arrangement with Asics Corporation Japan to market Asics brands ofshoes. and accessories in India. RRL has recently opened its flagship store under its franchiseagreement with Hamleys and plans to expand the store network in the coming year. RRL hasalso expanded its presence in business-to business office supplies through its joint venturewith Office Depot.Through ‘Reliance One’, RRL’s loyalty membership program, RRL enjoys the patronage ofover 5.5 million customers. In the coming year, RRL will continue on its mission to delightthe customers every visit. RRL will continue to provide unprecedented value to customersacross all its formats and stores. 42
  43. 43. 3.5.4 ControversyRecently their stores in Jharkand faced the ire of mobs comprising of local vegetablevendors. They vandalised and attacked the stores claiming that they were stealing theirlivelihoods.In August 2007, Uttar Pradesh Chief Minister Mayawati ordered to close 10 new storeskeeping view of Law & order situation. In November 2007, Reliance Fresh stores areattacked by Bharatiya Janshakti Party supporters headed by Uma Bharti.‘Suicide’ squad against Reliance Fresh outletsBhubaneswar/Cuttack: Traders and roadside vendors opposing the opening of Reliance Freshoutlets in Orissa on Saturday formed a “suicide” squad.“As many as 100 youth today joined the squad as they prefer to die while fighting rather thanfacing starvation,” All-Orissa Roadside Vendors and Small Shop Owners Associationpresident Pratap Sahu said.Reports said the vendors formed the squad soon after a meeting. — PTIBut some vegetable vendors dont want a job at Reliance, if offered one, because they want tobe their own boss.3.5.5 Key ExecutivesManagement Team Mukesh D. Ambani - Chairman & Managing Director Nikhil R. Meswani - Executive Director Hital R. Meswani - Executive Director H.S.Kohli - Executive Director Ramniklal H. Ambani Mansingh L. Bhakta Yogendra P. Trivedi Dr. D. V. Kapur 43
  44. 44. M. P. Modi S. Venkitaramanan Prof. Ashok Misra Prof. Dipak C Jain Dr. Raghunath Anant Mashelkar3.5.6 Future Planning:Company plans to have a pan-India presence by opening stores in 784cities and 600 smalltowns and achieve a target of Rs.10 billion revenue by 2010 by which time it hopes tocomplete Phase 1. In the first phase company plans to employ 500,000 people. It is followingan all-inclusive model giving the right affordability across all income groups. Company isaggressively partnering farmers by following a farm-to-fork strategy in its supply chainmanagement model and ensures that it delivers fresh fruits and vegetables at affordable pricesto consumers. Currently, Reliance Fresh has over 100 stores across the country.Reliance Fresh also offers a membership and loyalty programmed -Reliance One - to delivercustomized benefits to frequent shoppers. Currently, it has 200,000 loyalty customers acrossHyderabad, Jaipur and Chennai.Reliance Retail, the 100% subsidiary of Reliance Industries, on October 28 unveiled RelianceFresh, the first of its multi-format retail foray involving an investment of Rs 25,000 crore.Reliance Fresh is the company’s brand for neighborhood fresh-food outlets. It will also sellkitchen equipment and other edibles. Besides, it has planned hypermarkets, supermarkets,discount stores, department stores, convenience stores and specialty stores, to be unveiledshortly.The Reliance Fresh supermarket chain is RIL’s Rs 25,000 crore venture and it plans to addmore stores across different geographies, and eventually have a pan-India footprint by year2011.The super marts will sell fresh fruits and vegetables, staples, groceries, fresh juice bars anddairy products and also will sport a separate enclosure and supply-chain for non-vegetarianproducts. 44
  45. 45. Currently, selling through company-owned stores currently totals just$8 billion in India.Industry estimates say that the country’s retail industry is worth $300 billion, that is about Rs13, 50,000 crore. This stands a chance to blossom to $427 billion in the next four years.3.5.7 Farm to Fork Model of Reliance RetailThe Reliance retail company sources say it is setting aside Rs 50,000 crore to buildits farm-to-fork linkage. Reliance has drawn up plans for a presence in 784 towns and6,000 mandi(wholesale market) towns with 1,600 rural business hubs to service these. It has alreadyrolled out 177 Reliance Fresh stores across major towns in 11states. According to a companyreport, RIL is targeting a turnover of Rs 40,000 crore in the next few years.TRADITIONAL MODEL OF RETAIL RELIANCE FARM TO FORK 45
  46. 46. 3.5.8 Corporate Social ResponsibilityToday when most of the companies are busy in making profits by any means, there are fewOnes who are focused to return this society, a part of what they have earned through thissociety. Reliance retail is one of them. Following efforts of reliance retail are aimed atbenefiting the society making reliance socially responsible:1) Reliance Retail aims at recruiting people from the under privileged community in society."Hence, we are planning to train students from corporation schools and schools run byNGOs. And, we consider this as a part of our corporate social responsibility, "he said. Askedwhether the company will take students on an employment basis and pay them a stipendduring the course period, he said that actually, it is planning to charge a "small fee" fromthose who want to join the course "as we want to bring in some discipline and regularityamong the students", and will reimburse that once they are inducted into service2) Farming in India is highly fragmented and subject to harsh climatic conditions: onceharvested, it is very difficult to keep fruits and vegetables fresh. To secure high quality,Reliance Retail is directly sourcing fresh agricultural produce from thousands of farmersfrom villages through Collection Centers. With this concept, Reliance has built a businessmodel generating shared value that links the company supply chain more closely to poorfarmers in Indian villages. Reliance is providing a guaranteed market for the farmers’produce, reducing transaction costs and training the farmers in better and sustainable farmingpractices. This initiative results in higher income and upgrading of skills for the farmers, andreduced spoilage of produce (up to35 percent) and better quality products f or Reliance retailstores.3) Reliance retail has adopted “farm to fork” theory which means it is procuring directly fromthe farmers thus offering them quite reasonable prices for their produce as now nointermediaries are involved. In return Reliance is giving farmers information about how canfarmers improves their productivity. They have centers in villages who apart from providinginformation make farmers aware of market rates of different crops so that farmers can choosecrops they want to sow to become profitable. Farmers are provided technical help as well likeinformation about quality of seeds and fertilizers. 46
  47. 47. Chapter 04Data Analysis and Interpretation 47
  48. 48. Data AnalysisData collection is the systematic recording of information; data analysis involves working touncover patterns and trends in data sets; data interpretation involves explaining those patternsand trends.Analyzing survey data is an important and exciting step in the survey process. It is the timethat you may reveal important facts about your customers, uncover trends that you might nototherwise have known existed, or provide irrefutable facts to support your plans. By doing in-depth data comparisons, you can begin to identify relationships between various data that willhelp you understand more about your respondents, and guide you towards better decisions.Here data collected on the basis of questionnaire survey on customer satisfaction onorganized retail outlets is on Reliance in Bangalore.Walter H De vries, Zeithaml and Berryand Cronin and Taylor (2001). They conducted astudy on Quality of services by considering its various dimensions like reliability,availability, performance, serviceability, reputation, competent staff, responsiveness andcourtesy, technical facilities, operational facilities, technical procedure and communication.In contrast “Universal dimensions determining” the quality of services as received bycustomers is tangibility, responsiveness, assurance and empathyCronin and Taylor (1992) the conceptualization of service quality as a gap betweenexpectations and performance is inadequate. The research point out the confusion ispertaining literature over the relationship between service quality and customer satisfaction.According to that research, the concept of service quality should be customer’s attitudetowards the service, since the concept of satisfaction is defined as a gap between expectationsand performance or disconfirmations of expectations. 48
  49. 49. Table 4.1 Age of respondents Age Group No of respondents Percentage 18-28 58 58% 29-39 22 22% 40-50 12 12% 51-60 8 8% > 60 0 0% Total 100 100% Age of respondents 60 50 40 No of Respondents 30 No of respondents 20 10 Percentage 0 18-28 29-39 40-50 51-60 > 60 Age Group Fig 4.1AnalysisFrom the above graph and table presented above it is evident that majority of the respondentsare of age in between 18-28 years.InferenceThe above figure shows that most of respondents belong to age group between 18-28 years.Table 4.2 Gender of the Respondents (Gender ratio) Gender No of Percentage 49
  50. 50. respondents Male 68 68% Female 32 32% Total 100 100% Gender Ratio 80 60 No of respondents No of 40 respondent 20 Percentage 0 Male Female Gender Fig 4.2InferenceFrom the table and bar graph presented above, the distribution of the shoppers is evident.This question was aimed to identify the distribution between the two genders. It can bededucted that male respondents are more as compared to female respondents.Table 4.3 Income of respondents Income Ratio No of Respondents Percentage < 10,000 34 34% 10000-20000 40 40% 21000-30000 18 18% >30000 8 8% Total 100 100% 50
  51. 51. Income Level 50 40 No of 30 Respondents respondents No of Percentage 20 10 0 < 10,000 10000-20000 21000-30000 >30000 Income Fig 4.3InferenceFrom the above graph it is evident that most of respondents are having income level inbetween 10000-20000.Table 4.4 Shopping frequency Particulars No of Respondents Percentage Daily 10 10% Weekly 40 40% Monthly 44 44% Occasionally 6 6% Total 100 100% 51
  52. 52. Frequency of Shopping 6% 10% Daily Weekly 44% Monthly 40% Occasionally Fig 4.4AnalysisFrom the above graph frequency of shopping is evident. Of the 100 respondents it shows that10% of the respondents do shopping daily, 40% of the respondents do shopping weekly, 44%of the respondents do shopping monthly and 6% of the respondents shop occasionally.InferenceThe above figure shows that most of the respondents do shopping weekly and monthly. It canbe deduced that people who visit once a month and weekly are those people who visitsvarious stores for their regular needs and also may be because of the benefits by the storessuch as discounts and offers.Table 4.5 Preference of respondents towards branded retail outlets and Kirana Shop. Branded No of respondents Percentage outlets Reliance Fresh 44 44% More 16 16% Smart 16 16% Big Bazar 8 8% Nilgiris 6 6% Others 4 4% Kirana shop 6 6% Total 100 100% 52
  53. 53. 50 More 40 Reliance Fresh 30 Nilgiris Big Bazar 20 Smart 10 Others 0 Kirana shop No of respondents Percentage Fig 4.5AnalysisFrom the above graph it is evident that 94% of respondents prefer branded retail outlets inwhich Reliance Fresh has a maximum share of 44% which is followed by 16% of More, 16%of Smart and rest belongs to other stores.InferenceThe above figure shows that most of the respondents prefer shopping in branded retailoutlets. Maximum number of people does shopping in branded retail stores for their regularneeds and also may be because of the benefits by the stores such as discounts and offers.Table 4.6 Service of Retail outletsParticulars No of Percentage RespondentsExcellent 18 18 %Good 56 56 %Satisfactory 20 20 %Not Satisfactory 6 6%Total 100 100 Service of retail outlets 18% 6% 20% Excellent Good Satisfactory 53 Not Satisfactory 56%
  54. 54. Fig 4.6AnalysisFrom the above table and graph the satisfaction level respondents is evident with respect toservices provided by the retail outlets. Of the 100 respondents 18% of the respondents areagreed with excellent rating service. 56% of the respondents agreed with good rating service.20% of the respondents agreed with satisfactory rating service and 6% of the respondentsagreed with not satisfactory rating service.InferenceFrom the responses it can be inferred that most of the respondents are happy with the serviceprovided by the retail outlets and there are very less people who are not satisfied with theservices provided by retail outlets.Table 4.7 Expectation of Gifts and discounts From Company Preference No of Respondents % Respondents Yes 86 86 % No 14 14 % Total 100 100% 14% Yes No 86% Fig 4.7 54
  55. 55. AnalysisFrom the above table and graph the expectation of respondents is evident. Of the 100respondents it shows that 86% of the respondents except to receive free gifts and discountsoffered by the retail outlets and 14% of the respondents do not expect any free gifts anddiscounts.InferenceMajority of shoppers expect free gifts and discounts from the retail outlets. It can be deducedthat free gifts and discounts attracts more number of customers.Table 4.8 Perception about ‘Reliance Fresh’ Products Perception NO of Percentage of respondents respondents Excellent 8 8% Good 58 58 % Satisfactory 28 28 % Not Satisfactory 6 6% Total 100 100% Fig 4.8AnalysisFrom the above graph the perception of respondents towards “Reliance Fresh” products isevident. Of the 100 respondents 8% respondents has excellent perception about ‘RelianceFresh’ products, 58% of respondents’ has good perception about ‘Reliance Fresh’ products, 55
  56. 56. 28% of respondent’s has satisfaction about ‘Reliance Fresh’ products and 6% of respondentsnot satisfaction about ‘Reliance Fresh’ products.InferenceMajority of respondents are satisfied with the products available in Reliance Fresh because offeatures like price, quality, variety and brand.Table 4.9 Factors Influence Purchase of Reliance Fresh Products Number of respondents Tota N l No Ve Lea ot of ry st I resp Tot Im Nor im m onde alFactors p % Imp % mal % p % p % nts % 1Price 76 76 12 12 6 6 3 3 3 3 100 00 1Quality 84 84 10 10 2 2 2 2 2 2 100 00Convenie 1nce 22 22 66 66 6 6 3 3 3 3 100 00Availabil 1ity 38 38 54 54 2 2 3 3 3 3 100 00 1Brand 34 34 42 42 16 16 4 4 4 4 100 00Freshnes 1s 80 80 12 12 2 2 3 3 3 3 100 00 1Image 14 14 52 52 22 22 6 6 6 6 100 00 56
  57. 57. FIG 4.9AnalysisFrom the above graph it shows that factors affecting on purchase of more productsPrice Factor76% respondents have rated price very important, 12% rated important, 3% rated leastimportant, and 3% not important.Quality factor84% respondents have rated quality as very important, 10% rated important, 2% ratednormal, 2% rated least important and 2% not important.Convenience Factor22% respondents have rated convenience as very important, 66% rated as important, 6%rated as Normal, 3%rated as least and 3% as not important.Availability Factor 57